Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Devon Energy Production Company, L.P. v. Apache Corp.

Court of Appeals of Texas, Eleventh District

April 30, 2018

DEVON ENERGY PRODUCTION COMPANY, L.P., Appellant
v.
APACHE CORPORATION, Appellee

          On Appeal from the 118th District Court, Glasscock County, Texas Trial Court Cause No. 1695-A

          Panel consists of: Willson, J., Bailey, J., and Wright, S.C.J. [1]

          OPINION

          JOHN M. BAILEY JUSTICE

         This appeal concerns the statutory liability under the Texas Natural Resources Code of a producing oil and gas operator/lessee to make royalty payments directly to lessors with whom the producing operator/lessee did not have a lease. The trial court determined that the producing operator/lessee was not responsible for paying royalties directly to the lessors with whom they were not in contractual privity. We affirm.

         Background

         Norma Jean Hester leased her undivided one-third mineral interest in the subject land to Apache Corporation, reserving a 25% royalty interest. The remaining mineral interest owners (hereinafter the Lessor Plaintiffs) subsequently leased their combined two-thirds mineral interest to Devon Energy Production Company, L.P. The Lessor Plaintiffs also reserved a 25% royalty interest.

         Apache and Devon attempted to negotiate terms for a joint operating agreement for the joint development of the mineral estate. However, they were unable to agree to terms. Apache subsequently drilled seven producing oil and gas wells on the subject land. After Apache recovered its costs associated with production and drilling, Apache paid Devon its two-thirds share of the net revenue to which Apache believed Devon was entitled as Apache's cotenant in the mineral estate.

         The Lessor Plaintiffs filed suit against both Devon and Apache. The Lessor Plaintiffs alleged that Devon failed to pay the Lessor Plaintiffs "all royalties due" under their leases. The Lessor Plaintiffs also alleged that Apache failed to pay them royalties pursuant to Section 91.402 of the Texas Natural Resources Code. See Tex. Nat. Res. Code Ann. § 91.402(a) (West Supp. 2017). Devon denied all of the Lessor Plaintiffs' allegations and filed a cross-claim against Apache in which it asserted that Apache owed royalty payments directly to the Lessor Plaintiffs under Section 91.402 of the Natural Resources Code.

         All parties moved for partial summary judgment on the issue of which party owed royalty payments to the Lessor Plaintiffs. The trial court granted the Lessor Plaintiffs' motion for summary judgment against Devon and denied their motion for summary judgment against Apache on the issue of royalty payments. The trial court also denied Devon's motion for summary judgment against Apache and granted Apache's motion for summary judgment against Devon on the issue of royalty payments.

         Subsequently, the Lessor Plaintiffs settled their claims against Devon, and the trial court dismissed those claims. The parties then moved to sever Devon's cross-claim against Apache into a separate suit, which the trial court granted. The trial court then entered a take-nothing final judgment in Apache's favor, in which the trial court found that "Apache is not obligated under the Texas Natural Resources Code to pay royalties to [the Lessor Plaintiffs] on oil and gas proceeds" from the wells that Apache drilled.

         Analysis

         In a single issue on appeal, Devon argues that the trial court erred when it granted Apache's motion for summary judgment, denied Devon's motion for summary judgment, and entered a final judgment in Apache's favor on the issue of which party owed royalty payments to the Lessor Plaintiffs. Devon asserts that the trial court erred because Section 91.402 of the Natural Resources Code mandates that Apache directly pay the Lessor Plaintiffs royalty payments due under the leases between Devon and the Lessor Plaintiffs.

         A trial court must grant a motion for summary judgment if the moving party establishes that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). In order for a defendant to be entitled to summary judgment, the defendant must either disprove an element of each cause of action or establish an affirmative defense as a matter of law. Am. Tobacco Co. v. Grinell, 951 S.W.2d 420, 425 (Tex. 1997).

         We review the granting of a motion for summary judgment de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994). When reviewing a summary judgment, we consider all the evidence and take as true all evidence favorable to the nonmovant. Am. Tobacco, 951 S.W.2d at 425; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Additionally, statutory interpretation ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.